1. StratSimMarketing
Introduction

2. StratSimMarketing Content
In this computer simulation, your team will take over the management of one of five automobile manufacturing companies for up to 10 simulated years and make decisions in the areas of:
Marketing
Product Development
Manufacturing
Finance
Human Resources
Integrated long-term market-focused strategy.

3. StratSim Environment Based on the Automobile Industry.
One Market: Consumer
Consumer market of 150 million people.
Currently, low GDP and inflation growth rates.
Demand sensitive to GDP, interest rates, and decisions that you make as an industry.
Maximum of 6 yearly decision periods.

4. StratSim Environment The Products: Cars & Trucks
Principle Characteristics
Vehicle Class
Size
Engine / Performance
Interior
Styling
Safety
Quality
…and Price

5. StratSim Environment 7 Product Classes with Existing Vehicles:
(E)conomy
(F)amily
(S)ports
(L)uxury
(M)inivan
(U)tility
(T)ruck
Plus two potential new classes if developed:
(A)EVs
(D)elivery*
* B2B only.

6. StratSim Environment Competitors: 5 Firms (A-E)
Each firm has 3 vehicles on the market.
Amazing Cars ( A ) ALFA ( F )*, ALEC ( E ), AWESOME ( U )
Best Motor Works ( B ) BOFFO ( F ), BEAUT ( L ), BUZZY ( S )
Cool Cars ( C ) CAFAV ( F), CAMINI ( M ), CLIMAX ( L )
Driven Motor Co. ( D ) DEFY ( F ), DELITE ( E ), DETONKA ( T )
Efficient Motors ( E ) EFIZZ ( F ), ESTRUCK ( T ), EURO ( U )
The firms have different strengths and weaknesses and are uniquely positioned in the market.
* Corresponds to Product Class.

7. StratSim Environment Competitors: 5 Firms (A-E)
Starting positions on several key performance measures:
MANUF. SALES
( B$ )
MARKET SHARE
( $ )
NET INCOME
STOCK
PRICE
FIRM A
20.5
23.7%
1.8 51
FIRM B
12.9
14.9% 50
FIRM C
13.7
15.8%
1.7
FIRM D
19.3
22.4%
FIRM E
20.1
23.2%

8. Industry Overview CLASS POSITION SEGMENTS VEHICLES EXAMPLE Economy
Smaller
Low Price
1, 2
Alec, Delite
Family
Mid Size
Mid Price
2, 4
Alfa, Boffo, Cafav, Defy, Efizz
Luxury
Larger
Expensive
4, 5
Beaut, Climax
Sports 3
Buzzy
Minivan 2
Camini
Utility
Mid-High Price
3, 5
Euro, Awesome
Truck
Mid-Large Size
1, 3
Detonka, Estruck

9. Consumer Market Segments: Customers:
5 consumer segments (1–5) with different needs and class preferences.
Customer = Intersection of segment and class
(e.g., 1T is a value seeker who wants a truck)
Segments:
Value Seekers (1)
Families (2)
Singles (3)
High Income (4)
Enterprisers (5)
Customers:
1E, 1T
2E, 2F, 2M
3S, 3T, 3U
4F, 4L
5L, 5U
…New customers may emerge!

10. Consumer Market Purchase Process
Customers have different needs and expectations with regard to vehicle characteristics.
Customer "consideration set" based on product class, size, and MSRP.

11. Consumer Market Purchase Process
Customers prefer a particular size vehicle.
Customers prefer a specific engine size due to the trade-off between performance and fuel economy.
Customers prefer better (more) Interior, Styling, Safety, and Quality ("ISSQ").
Customers weigh this bundle of goods against the price charged.
Hints: Customers may have certain "hot buttons" or attributes that are particularly important to them, and some customers may be more Price sensitive than others.

12. Decisions Overview Technology Product Development Consumer Marketing
B2B Marketing (optional)
Manufacturing
Distribution
Licensing (optional)
Finance
Integrated Long-Term Market-Focused.

13. Technology Each firm has an overall technology capability with
regard to Interior, Styling, Safety, and Quality that can be
improved through investment in technology.
For Example: If firm A’s technology profile is 4, 5, 4, 5, it can develop and/or upgrade vehicles to these maximum specifications.
A firm with greater technology capability can produce vehicles with better features in these areas AND produce vehicles with the same features at lower per unit cost.
Weigh benefit against cost of investment.
Important: Investing in technology does not automatically improve the specifications of your products, only your ability to do so through upgrades.

14. Technology Cost of Investment and Estimated Benefit.
Click here to change your Technology Capabilities.

15. Concept Creation
To introduce a new product, a firm must first develop a product concept.
A concept consists of all the vehicle specifications (class, size, engine, attributes).
Your firm will receive feedback on the unit cost, development cost, and time to develop.
Your firm may also run a concept test to see how a customer views your concept.

16. Product Development Product Development takes place in
"Development Centers".
New products move from concept to development in one of the centers.
Upgrades also take place in the centers.
Each firm starts with 2 development centers allowing concurrent development on two products (new products or upgrades).
New development centers can be added over time up to a maximum of five (one per period).

17. Product Development 4 General Approaches:
Minor Upgrade: Based on existing product, uses 1 center for 1 decision period, prepare launch now (immediate impact after advance). Inventory disposed now.
"tweak" – Max. change of 2 size, 5 HP, 1 other specs.
Major Upgrade: Based on existing product, uses 1 center for 2 decision periods, prepare launch next decision (1 year). Inventory disposed next year.
Max change of 10 size, 20 HP, 2 other specs + "tweak" next year
New Product, Same Class: Based on concept, uses 1 center for 2 decision periods, prepare launch next decision (1 year).
New Product, New Class: Based on concept, uses 1 center for 3 decision periods, prepare launch in two years.
Use concept test for new products to measure "quality" of your offering.
Balance opportunities, speed to market, cost, and need for change.

18. Product Development
To introduce a new product (new brand name, not an upgrade), a firm must first develop a product concept.
A concept consists of all the vehicle specifications (class, size, engine, attributes).
Your firm will receive feedback on the unit cost, development cost, and time to develop.
Your firm may also run a concept test to see how a customer views your concept.

19. Product Development Product Development Timelines
 Results for
Period N1
Decisions for N+12 
Period N+1
Decisions for N+2 
Period N+2
Decisions for N+3 
Period N+3 
Minor Upgrade
$100-$300 Million
in current year
Modify Specs
In Dev. Center
Adjust Marketing Mix
Adjust Production (Inventory disposed)
In Market
Results impacted. (Including sales, retooling, inventory write-off)
Major Upgrade
$250-$750 Million
Spread over 2 years
Build Add’l Capacity
Adjust Production
(Inventory disposed)
Results impacted.
(Including sales, retooling, inventory write-off)
New Product
(Existing class)
$250-$1,500 Mill.
Create Concept
Name Product
Set Marketing Mix
Set Production
Results impacted. (Including sales, retooling)
(New class)
$500-$2,500 Mill.
Spread over 3 years
Including sales, retooling)
Licensing
(Optional feature)
Immediate
Negotiate with Licensor
Negotiation of terms of
license, make and accept offer,
enter marketing mix decisions
Results impacted by
license launch. Revenues to licensor. Re-enter terms of license (ore renegotiate)
Product Development Timelines
(From the StratSim Case)
1 Period "N" is the period just completed for which you are now currently reviewing results; e.g.: Period 1
2 Period "N+1" is the period for which you are now making decisions. It is the period for which results will be created as the simulation is advanced after the current decisions are completed; e.g.: Period 2.

20. Product Development Example:
In the 1st decision period, a firm initiates a minor upgrade and a new product in a new class…
If, in the following period, the firm thinks it will want to initiate two more upgrades, what are its options?
Build a new development center in the 1st decision period so they would have 3 operational centers in the 2nd decision period.
Only choose one upgrade in the 2nd period (because the new product would occupy one development center).
Choose to discontinue development of the new product to free a development center.
Hints: Be sure to plan development time lines and development capacity.

21. Product Development
Sample development screen showing an upgrade (Alfa), new product (Aphid), and a new development center:

22. Consumer Marketing Corporate Level
Budget set by region (North, South, East, West) to create general firm preference and support dealerships.
Public relations to create interest in firm developments.
Direct Mail to different consumer segments.

23. Consumer Marketing Product Level: Advertising and Promotion
Advertising budget to build and maintain awareness.
Advertising theme (performance, interior, style, safety, quality) to appeal to target segment’s "hot button".
Promotion budget to help spur sales during slow periods used for rebates, special financing, attractive leases, etc.

24. Consumer Marketing Product Level: Pricing
MSRP = Manufacturer’s Suggested Retail Price used to position vehicle, set expected price in mind of consumer and dealership.
Dealer Discount = % discount off MSRP to dealer
MSRP - discount = Actual revenues to your firm
Actual selling price to consumer (retail price) determined by dealer.

25. Consumer Marketing
Consumer Marketing Decision Screen

26. Manufacturing Capacity
Total vehicle production must be less than capacity or incur over- capacity charges.
Capacity may be increased, but takes one year before available and costs $$$.
Plant investment is depreciated over 10 years.
Maximum increase (or decrease) in a year is 50% of current capacity.

27. Manufacturing Production
Set production based on YOUR sales forecasts and inventory levels.
Retooling costs for initial or increased production.
Remember there is a cost to dispose of inventory of old vehicles if upgraded (minor or major).
Set flexible production (+/- 10%).
Adjusts production if > 120 days or insufficient to meet orders.

28. Manufacturing Note over-capacity
( 1845 > 1800 ) and resulting charge…
…and Alfa inventory write-off (upgrade).

29. Distribution Dealerships make the actual sale to consumer.
Set up on a regional basis (North, South, East, West).
Can open or close dealerships (max of 10% change each year and takes 1 year to open/close).
Dealer ratings (1-100 scale) indicate customer experience at dealership, impacted by:
Profitability and product offerings.
Training, education and support.
Dealer discounts and servicing.

30. Distribution Note Coverage ( = established / full)
…and 20 new dealerships started.

31. Finance Uses of cash (long-term investment decisions):
Technology, product development, capacity, retooling, advertising, distribution, repurchase of bonds and stock, repayment of loans.
Sources of cash:
Operations, selling bonds and stock, short-term borrowing.
Use Pro-Forma to see likely impact on cash position based on YOUR forecasts and decisions.

32. Finance To repurchase stock, enter a negative value ($).
Click here to issue bonds and stock.
To repurchase stock, enter a negative value ($).
Bonds are callable after three years.

33. Financial Performance
Financial Statements
income statement,
balance sheets
cash flow
Stock price and bond ratings
Use Pro-Forma reports to see likely impact on performance based on YOUR forecasts and decisions.
Actual Results Will Vary.

34. Internal Reports Internal Analysis: Performance Summary
Income Statement
Balance Sheet
Cash Flow Statement
Product Contribution
Marketing
Distribution
Manufacturing

35. Market Reports Market Analysis: Industry News Economy Vehicle Classes
Regional Sales
Consumer Segments
Consumer Customers
New Customers
B2B Segments*
B2B Contracts
* B2B reports are optional and will be displayed only if selected.

36. Competition Reports Competitive Analysis: Products Market Share
Technology
Marketing Communications
Distribution
Manufacturing
Financials

37. Tools and Research Tools Available: Vehicle Sales by Customer($)
Focus Groups ($)
Concept Test ($)
Competitive Mapping ($)
Perceptual Mapping ($)
Test Market ($)
Conjoint Analysis
Portfolio Analysis
Note: Tools available will vary based on customization selected.

38. Decisions Menu Technology Product Development Consumer Marketing
B2B Marketing (optional)
Distribution
Licensing (optional)
Manufacturing
Financing
Decision Summary

39. Decision Summary
Check your decisions on the Decision Summary screen (Decisions menu) before the simulation is advanced to the next period.

40. Decision Analysis
Check Decision Alerts! on the Decision Analysis menu before the simulation is advanced to check for warning messages before your decision deadline. Use the Pro-forma to enter your forecasts and help you to determine your best course of action.

41. StratSim Logistics
All decisions are saved on the server, so you must be online.
Everyone on the same team shares ONE decision file, so when one person makes a change, the whole team makes that change. In addition, when one team member purchases a tool, the whole team purchases the tool. In other words, organize your decision process!
It is recommended that you print out decision summary and pro- forma income statement when your team is done entering its decisions.
Decisions must be completed on time.
Results will be available at beginning of next meeting time.

42. Final Considerations
Your strategy drives your decisions – make sure you have one!
Focus on how to best serve your target markets through a total offering – product, marketing, service, and price.
Importance of team organization – HR.
Manage your margins – understand financial implications of decisions.
Understand fixed and variable costs.
Long term vs. short term.
Make wise investments.
Use the Pro-Forma for insights BEFORE finalizing decisions.
Try new approaches – apply concepts – experiment – have fun!